How Businesses Can Effectively Measure Customer Success

This article covers how businesses can effectively measure customer success and ensure that their customers achieve their desired outcomes while using their products or services.

How Businesses Can Effectively Measure Customer Success

‌‌Last week, we had a successful Twitter space titled - How to Effective Measure Customer Success - our guest speaker was Ajewole Oluwatoni who is the current product lead at Kundakids.

Aaron Ejeme, who leads the growth team at Engage hosted the Twitter space and asked Toni thought-provoking questions. This article provides the details of what went down during the space.

Here is what was covered:

  1. What is Customer Success?
  2. Why Customer Success is Important to SaaS Businesses
  3. A Typical Case Study Illustrating the Duties of a Customer Success Team
  4. 5 Metrics that help Measure Customer Success
  5. Advice for Business Owners just starting about Customer Success
  6. Recommended Tools for SaaS Companies to  Measure and Improve Customer Success.
  7. Wrapping Up: Employ Engage for your Personalised Customer Messaging.

What is Customer Success?

According to Toni, this is a pretty straightforward term. Customer Success can be defined as whatever culminates into success for the customer. He went ahead to give a background of how the word came to be in use.

Customer success is a relatively new term and before it became popular in the years 1997 and 1998, people paid for services without having an accurate understanding of how what they paid for would work.

By the time they realized that the product or service paid for was not relevant to them, they would have wasted a lot of money which caused stagnation in their expected growth. This would make them stop using the product and start looking for an alternative.

‌‌A couple of companies realized this was a problem and decided to act on it. They created a body called the customer success team. Their job was to sit with customers and ask them relevant questions such as why they wanted to use their product.

Toni gave an illustration that goes like this:

If a customer wants to use a product by Company B, the customer success team from Company B will go through these questions with the customer to determine what success meant to them. Doing this will turn the customer into a loyal fan who would in turn recommend Company B to their friends and family.

Essentially, customer success personnel help to ensure that both the buyer and the seller company are profitable to each other. This includes checking to make sure that even regular users of a platform enjoy the content provided even if they aren't immediately buying a product.

Why Is Customer Success Important to SaaS Companies?

Aaron asked this question about SaaS companies specifically and Toni gave an answer based on his initial definition of customer success. Businesses must ensure that their customer gets value, is satisfied with what they paid for, and that their success as a customer is met.

Here are some reasons why customer success is important:

  1. It leads prospective customers to make their first purchase: The customer success team of a company according to Toni helps nurture the customer until they make their first purchase. This has to do with the processes set up to receive a customer once they indicate interest.
  2. It Improves Retention: Toni gave an elaborate but vivid example of a business that started on a great note. This company invested a lot of money and creates an amazing product with a sales target of up to 50% that had to be met by the end of the month. Toni directed our attention to the fact that most companies function like this.

    They are eager to acquire new customers and expect them to become paying customers immediately. But they forget to set up processes that ensure these customers continue to pay again and again over the months and years. This is one of the most important functions of a customer success team. They should make sure that these new customers continue using their product.
  3. It Reduces Churn: If the right processes are in place when a customer buys and finds out that the product is not immediately useful to them, the customer success team can find out where they're facing difficulties and help them. This ensures they stay with the company instead of running off after the initial payment.
  4. It Increases the Lifetime Value of the Customer and Revenue for the Company: Even more importantly, the customer success team should know that the longer a customer stays on the platform, the more they buy. This increases their lifetime value and the income of the SaaS company that sells the product.

A Typical Case Study Illustrating the Duties of a Customer Success Team

Oluwatoni then told us how he worked with a team on an app; U-Lesson, an ed-tech company in Nigeria. Their consumers were downloading the app and paying for the first month but were not using the app.

To understand why they were not using the app, Toni and his team set up a customer engagement tool, attribution software, and a data scientist. They then created a Customer Success Team. They discovered that those who churned paid for the subscription but didn't actively use the app because:

  • Some of their main users didn't own a device - in this case, these main users were students who had to depend on their parent's device
  • Most completely forgot they had a subscription to Ulesson.

Their customer success team started having significant conversations with them and before they knew it, their retention rate increased in real time and their sales went up. Mostly, they needed to interact with their customers and add that human feel to their customer service to encourage them to use the app.

This led Aaron to talk about our customer segmentation feature on Engage that makes it easy for businesses to create unique segments or groups of customers at certain stages of their buyer journey. Which will help their customer success team connect with them through email, SMS, push, and in-app notifications.

5 Metrics that help Measure Customer Success

According to Toni, here are the 5 metrics that will help business to measure their customer success:

1. Lifetime Customer Value: The question is "How much is your customer worth to your business?".  He gave an example; If a customer pays a monthly subscription fee of $20 for your subscription-based business, you need to get that customer to keep paying monthly for up to three months before you can say you're profitable. If it happens once, you've broken even and are possibly going to run at a loss in the long run.

2. Repeat Purchases: For one-off businesses such as a cosmetics business, Toni explained that if your customers keep coming back, especially since your business is not a subscription-based one, then your customer success is effective. Otherwise, it needs work.

3. Retention Rate: This measures how long your paying customer continues using your product over time. He gave an example of a company that started the year with 100 customers and then loses 50 in the second month - which means that the business has lost 50 paying customers and the customer success team is most probably responsible. If they acquire even more and retain the initial 100 customers, then the customer success team is most definitely doing a great job.

4. Churn Rate: He explained that if your business is losing customers very often and very fast, then the customer success team is doing a very terrible job and should be checked.

5. Net Promoter Score: This is how likely people are to recommend your business. It usually consists of inputting a scale on your site for your customers. If they choose between 1 to 6, that's a low grade. A good scale is from 8 to 10 because any customer who uses your product and enjoys the entire experience will want to preach the good news to all and sundry. This is a good metric.

Advice for Business Owners just starting out in Relation to Customer Success

Oluwatoni gave sound advice to every business owner that is just starting and it went like this;

The attention you give to customer acquisition is as important as the attention you should give to customer retention. This is because a lot of small businesses are so big on acquiring customers but have a problem with retaining them. He said customer acquisition cost increases over time.

For example, the customer you acquired with $10 today, maybe acquired with $70 next year. Also, there's a limitation to the number of customers you can achieve within a certain period. You must be obsessed with the acquired customers.

Check on them, make sure they are getting value from the service you are providing, and ensure that they are getting a massive return on the success they expected to receive from your business. He gave an example of Facebook and its customer success team has recently started calling and taking feedback from their users to ensure that they are keeping their customers within their ecosystem.

Toni started by saying that there are features to look out for when looking for the right tool to handle customer success. He then mentioned that the bane of customer success is the customer engagement feature. How do you engage your customers? How do you understand what your customer is doing on your platform? Look out for these.

Unsurprisingly, Engage was his first recommended tool. It is a customer engagement platform that combines many other tools you would have used on other platforms into one ecosystem. With Engage, you can create personalized messaging campaigns via, emails, SMS, push, and in-app notifications.

With Engage, you can create multiple segments that help you to meet your customers where they are in their journey and serve their needs. You're not just sending generic emails or messages instead, with Engage you can send personalized messages to your customers.

For example, if a customer downloads your app and hasn't registered, you know what kind of email to send to that segment.

Another important tool is PostHog. It is a customer data platform that enables you to map out your growth funnel, keeping track of the number of people who came into your funnel, for example, people who signed up, and what actions they took. You can also watch recordings of how your customers are using your platform.

At Engage, we have an integration partnership with PostHog which means that any business that uses PostHog can send their customer data to Engage and use it to create unique customer segments and send the appropriate messages based on the data.

For product usage and data on what your customers are doing on your platform, Google Analytics is decent, especially for small businesses.

Some other tools include Firebase, MixPanel, Web Engage, Intercom, and many others.

Wrapping Up: Employ Engage for your Personalised Customer Messaging

Aaron ended the space by making some announcements. The first was that everyone who signed up for the course would receive an email that would include a link to the recorded space so they could listen in.

Secondly, for anyone who signs up on Engage and upgrades their account to the Starter or Growth plan between 15th February to 28th February, they will receive a 20% discount for their first three (3) months.

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